Morgan Stanley tops Goldman in rerun

Morgan Stanley’s bond traders are 2-0 this year against Goldman Sachs Group Inc.

For a second-straight quarter, Morgan Stanley posted more fixed-income revenue than its bigger competitor in one of Wall Street’s most hotly contested arenas, reporting the smallest drop among top U.S. investment banks on Wednesday. Equities trading also outperformed Goldman Sachs, as did the firm’s return on equity.

Morgan Stanley may have benefited from Chief Executive Officer James Gorman’s strategy of scaling back in commodities, selling stakes in businesses after regulatory scrutiny and low returns. That helped during a quarter in which Goldman Sachs, which had topped Morgan Stanley in fixed-income trading for more than 20 consecutive quarters, said it generated the least commodities revenue since it went public 18 years ago. Gorman also overhauled the New York-based bank’s fixed-income business in recent years by cutting 25 percent of the division’s staff.

The firm’s $1.24 billion in fixed-income revenue — a 4.5 percent drop — edged out the $1.16 billion that Goldman Sachs reported Tuesday and beat analysts’ estimates. Equities trading also exceeded expectations, producing $2.16 billion in revenue, a figure that was almost unchanged from a year earlier.

Morgan Stanley’s net income jumped 11 percent to $1.76 billion, or 87 cents a share, from $1.58 billion, or 75 cents, a year earlier. That compares with the 77-cent average estimate of 22 analysts surveyed by Bloomberg.

Wealth-management revenue advanced 9 percent to $4.15 billion as markets climbed, compared with the $4.12 billion prediction from Jason Goldberg of Barclays PLC. Investment-banking revenue rose 28 percent to $1.4 billion on higher volumes in equity and debt underwriting, compared with analysts’ $1.18 billion estimate.